The Future of Uber and Lyft Fare Cuts

Harry here. We haven’t seen any fare cuts from Uber this year, but over the past few months, we’ve been noticing an alarming trend. Today, senior RSG contributor Christian Perea takes a look at the future of price cuts.

2017 marks the first year Uber has not cut rates for drivers as part of their “Winter Warm-Up” guarantee. Uber has slashed driver pay each January for the last three years though, claiming the lower prices will keep drivers busy when it gets slow. Lyft then does the same thing, and then both companies mostly forget to reinstate higher prices after winter is over.

This year, drivers are happy we haven’t seen any real price cuts, but the way drivers now get paid has also changed over the past year. This means it’s possible we’ve already seen fare cuts and don’t even realize it yet.

Future Price Cuts: No Longer Announced

Over the last year, Uber has been offering a lot of incentives to drivers to do things that Uber likes. For example, driving in a certain area for Earnings Boost to basically geo-target their driver supply. Or offering a large $500 incentive to complete 120 trips, which makes drivers seek short rides and UberPOOL to tout their ride count.

These subsidies have been specifically designed to keep drivers on the road, and the bonuses have increasingly begun to account for a larger part of a driver’s pay. Many drivers in big cities now rely on them.

There Are Now Two Parts To Driver Pay

You can really separate driver pay into two categories: Per Mile/Minute pay and Incentive Pay.

Per Mile/Minute Pay: This is the standard pay per mile/minute that drivers receive from each ride. It includes a minimum fare, and if you are lucky a base fare. It’s the model we all know and love as drivers that has traditionally determined how we get paid. It is also where Uber/Lyft would announce price cuts in the past.

Incentive Pay: This is all of the Earnings Boost, Power Driver Bonuses, trip incentives, etc from either Uber or Lyft. Think of it as any money you receive OUTSIDE of the per mile/minute rate I talked about above. It’s usually awarded for completing a goal set by whoever you drive for.

The incentive pay is actually a market subsidy to prop up the supply of drivers. The old style of per mile/minute pay has dropped so low that Uber and Lyft actually have a difficult time getting people to drive consistently, leading to a shortage of driver supply.

Incentive Pay Controls Driver Actions

Incentive pay keeps drivers on the road, but it also keeps us in certain zones or on the road during specific periods of time. And it’s actually a smart strategy since it allows Uber to direct a massive army of contractor-pirates more effectively without paying them like employees.

Would you really want to do a bunch of short trips if you weren’t going to get a big “payoff” for completing 120 trips a week?

2017 Uber Driver Incentive Cuts

As winter approaches, the bonus pay has noticeably gone down and the bonus schemes have changed. Uber doesn’t publish one big record of all the incentives they offer, but several drivers have already reported a drop.

Lower Trip Incentives: Harder to Obtain

RSG reader Marty was kind enough to send us a spreadsheet of his trip Incentive history. His history clearly shows trip incentives being reduced over the last few months in the Bay Area. And I personally (also in the Bay Area) have had my Uber trip incentive offers cut from $500/wk for 120 rides to $410/wk for 120 rides.

From his spreadsheet, we can see that we are already starting to get paid less in 2017. Marty saw his weekly incentive drop from $500 to $450 to $430 over the course of a month.

And those lowered incentives are actually harder to obtain because drivers now have to do 60 trips Monday to Thursday and then ANOTHER 60 trips Friday to Sunday in order to get the full $400+. In the past you could front load or back load all of your trips and at least take a day or two off. But now, if you are a full-time driver, you basically have to drive 7 days a week to get this incentive. This is an example of how Uber is constantly tweaking the terms of these incentives to make them more difficult to achieve.

Earnings Boost is Also Lower

One of our frequent readers and commentators explained the situation in Los Angeles around promotions being walked back, and how that is noticeably affecting driver pay:

Uber is already reducing what they pay us. First it was the removal of the precious metal levels…. I looked at some of what I was getting in May and June. It was 1.8x for the morning in all parts of LA Core. About 1.6x in the afternoon and then up to 2.0x into the evening. Now, they’ve cut the Core area into 5 sections and the incentives vary from one area to another.

– VHound

Different Boosts For Different Drivers

The images below come from two different drivers logged on at the same day at the exact same time in the same area. But notice that each driver has a different level of Earnings Boost in each zone. Now we have confirmation that different drivers most definitely are getting different incentives, but how are these incentives decided and who decides which drivers get the best incentives?

“Upfront” Pricing Plays An Important Role In This

Upfront pricing has completely separated what a passenger pays from what a driver receives as pay. It allows Uber or Lyft to charge the passenger whatever they want and only pay the driver based off of the per-mile/minutes driven. This separation is important because it opens the door to raising prices in the future for passengers without raising the pay for drivers. Thus allowing the company to capture higher proportions of the fares.

Both Uber and Lyft tell us that we get paid the same, and that the passenger is quoted a price based off an “estimated route”. However, we’ve already shown in a previous article that Uber has a tendency to overcharge the passenger by assuming a longer (more expensive) route than what would otherwise be taken.

Lyft Shoots First in 2017: We May Still Get Price-Cuts From Uber

Last Friday and Monday, Lyft announced price adjustments to a bunch of markets. Some markets seemed to get tiny cuts while some got tiny bumps in pay. The major takeaway from most of these price adjustments is that they don’t really make a big difference, and they are more or less to exactly match Uber’s pricing. (Except for some cities like Orange County, which saw a cut from $1.05/mile to $0.90/mile.)

Lyft has followed in Uber’s fare-cutting footsteps in the past, but being the cheapest option is important to Uber. The ball is now in their court. In the past this has been followed by steep cuts in prices to passengers from Uber. Wanna place a bet on how they will respond?

Even Lyft is confused! Here’s an e-mail they sent out in Spokane telling drivers that they were getting a pay increase when they were actually getting a minor pay cut.

So drivers, what do you think about Uber’s new form of price cuts? Have you noticed a decrease in bonus and incentive offers?

-Christian @ RSG

Save

Save

Make Every Mile Count

Did you know that every 1,000 business miles can generate $535 in tax deductions? Never miss another mile with the new QuickBooks Self-Employed automatic mileage tracker.

In 2014, Christian left his job at a mental health center to drive full time for Lyft and Uber. Since then, he has driven for mostly Lyft with a little bit of Sidecar and Postmates thrown in for experimentation and Uber when he doesn't feel like talking to people. He likes to talk about Politics and Economics over a good beer to whoever will listen to him.

“which makes drivers seek short rides and UberPOOL to tout their ride count.” I KNEW that’s why they were doing it. We really need to start talking to each other as drivers when we are at gathering points like the airports. STOP ACCEPTING POOL/LINE REQUESTS.

Christian Perea

Pool/Lines are more likely to take you into the suburbs anyways.

Clybourn

They also appear when surge goes up, and if you accept them, surge takes a huge hit for other drivers AND YOU as subsequent requests are met with higher supply.

Christian Perea

Exactly. My only counter though would be that in high surge, a pool still pays pretty good and has a high chance of a long distance ride. I’ll do long distance on 2.5 and above pools.

Clybourn

Not me, I don’t accept any Pool/Line requests ever.

Gerry Zurek

Every pool request I had takes me into chicago. I always start in the suburbs.

theellucidone

No matter what. We are screwed by Uber and Lyft.best solution get another job

thomasah

Has anyone heard from any of the proposed driver’s associations recently? Because of the way the fares are manipulated, there needs to be some sort of driver intervention.
From what I have been seeing over the last 18 months, Uber’s goal is to make ride-share as indispensible as possible. Once this is accomplished fares and profitability will increase. Of course, until then, drivers really need to from some sort of association to bargain with these companies. One really good way would be for all drivers in a to market take the same day off, like Sunday.
Uber knows there is no cohesive element (like an association) to challenge their pricing tactics so they do whatever they want, experimenting with fares without regards to the effect on the drivers.
Maybe there should be some sort of pressure put on Uber and Lyft investors for them to start turning a profit.

Yup. Uber will continue to abuse drivers as long as drivers take it. Driving 15 miles to take some stupid college kid to Starbucks for a 3 dollar fare is insanity. Uber is perfectly willing to let us beat the crap out of our cars for peanuts. Their model is to just sign up some new suckers. Drivers need to organize boycott days

wcpreston

Why would you accept that ride? I NEVER accept a ride that is more than 10 mins away.

Tamera Noll

Hello Harry. Well as you know..I am on the newer side…this being my 7th week. I did notice that Uber was offering $65 for 35 trips Fri – Sun and don’t remember the higher $ amount but it was like 70 or 90 for 55 rides. – then the weekend before last the smaller incentive (35 for $65) was not there..only the large one, which I cannot do due to work and class. But it came back this LAST weekend which I didn’t have class so I went for it and did it of course. Now during the week it’s been a normal (on the low side) do 25 Rides for $55 the other one is like 60 rides for $90 now it’s $70 and the 25 is now $40 So YES they are lower. I only average 15 to 20 hours a week on top of my day job so I guess I get these little ones. That’s all I have seen for now.

Christian Perea

I have received all of the little ones too. There should be a section at the bottom of each email where you can leave feedback. Uber is open to hearing our response to promos so maybe try leaving feedback there?

Tamera Noll

THANKS!

Christian Perea

Where do you drive??

Tamera Noll

LA..I live in Glendale 🙂

Christian Perea

Gotcha. The bonuses above are from SF. You might want to compare yours with another LA Uber driver.

Tamera Noll

Totally 😛 I was just letting ya know to help if it could. Maybe I should [email protected]@

Tamera Noll

Actually now that I think about it..I think my successful thing is that I don’t really care what others are making..YES I am interested..and I care that they do well and are happy. But I care that I can make what I NEED/WANT or more of course. 🙂 AND if I am doing something that I could be doing better and making more..I am totally interested…I feel I am just feeling it all out still..I am one of those drivers that takes EVERY request..I don’t even LOOK at the score of the person….I am all in basically. I am quite satisfied for the moment and have had NO issues really. I keep wanting to try LYFT …need to get the car check..but I keep putting it off as I am making and working as much as I want at the moment. And their $475 in 30 days I don’t think I can make quite frankly with the amount of time I have available and from what I have heard as far as how many requests you actually get..so I keep putting it off..but I WILL try them at some point. 🙂 Anyway yeah…just sharing LOL

Tamera Noll

I am SO sorry! Id idn’t see your post. I drive in Los Angeles area.

Mike Malik

The 120 ride bonus may be achievable in a dense city environment, but not possible in suburbia. Even with a lot of luck if you average 2 rides per hour, it will take 60+ hours to get it.
They used to offer stepped incentives at 30/50/70/100/120 ride counts, but the lower counts have almost been eliminated.
Yeah …. they are running a business, and can tweak incentives to suit the best outcome for them. But drivers can also vote by limiting the time they keep the app on.

Christian Perea

Exactly. Although they usually have different versions of that program for suburban areas. SF just has a high one at $4-500.

Looks like driver B was on his cell phone when that screenshot was taken!

Christian Perea

I think driver B was calling Driver A. It was a dad calling his son who also drives for Uber to compare.

Gaspar Lemarc

They are cornering the drivers to take Pool/Line rides between 10am and 5.00pm Mon-Thursday. This scenario make the drivers work for third-world rates while they maintain their SF passengers happy.

The effect on the driver is rather toxic. It turns out, that those rides “Burn the driver out” making you tired physically and emotionally. These rides take you way out to the sticks. Places like Ocean, Geneva, Excelsior, Outer Richmond/Sunset, Park Merced, etc. A standard 2-drop off pool/line, will eat up 45′ + the return (you come back empty usually) makes it about a 90 min (circa) ride and $12+ in your pocket.

I’m in SF & been driving on/off since the early days, I can say that reaching 120-uber rides is almost impossible to achieve. Even for drivers with thick skin. You’ll be forced to work 7 days. No life for you really because you have to work in the evenings and…get up early up the next day.

The SF market is saturated, maxed out. Done (unless you live with your mother, and she buys the food) On a very good day and after more than 9 hrs, you may make $120-$140 – but only 12-15 rides per day. Do the 120 math. I see more and more drivers going empty on Valencia St, Union, Polk on a regular basis now a days. Passengers don’t grow on trees either and the surge is OFF. Get the point?

Thus, it could be argued quite successfully indeed as Christian says, that our earnings are lower than the last two years already.

Christian Perea

I think lower ridership is typical for January. Especially in the burbs. So that probably draws more “flat-landers” into the peninsula making things worse for driver saturation. Especially since everything around us pays below $1/mile.

For the longest time, they couldn’t saturate SF! I guess they finally figured it out.

Matt Wernecke

Thanks Christian.
What about Atlanta? I’m not in California
Does UBER incentives vary by city?
If I drive 120 riders per week, will I get $410
I hit 42 rides between monday and today.
If i make up the difference, by Sunday, can I make that $410?
I have not seen boost pricing in weeks
Boost pricing here is always in high traffic areas, where it makes no sense to drive.
?
Not been offered boost incentives in weeks.
Right now I’m at 98% acceptance rate, so my min., pool rides pay as much as uberx.,
My market has too many part time drivers.
I’m full time.
Please advise Atlanta Drivers.
Thanks, for your help!

Matt

city

Christian Perea

The $410 is for San Francisco man. I’m sorry to get your hopes up :/

Any Trip Incentives that you qualify for will show up in the Uber app or through your email. I would talk to other drivers in your area and see what or if they are being offered anything special.

I’m in San Diego and we haven’t had squat for incentives lately. We’ve never had boost. power driver, etc. (For Uber, we do for Lyft.)

Desperado66

As a Bay Area Uber driver, I too have watched the bonus for 120 rides slide further south each week. But what really makes me question the bonus decisions at Uber is the change from a 5-tier bonus system to a 3-tier system that took place around the beginning of November.

With business booming during the summer, I could see the Uber bonus system for what it was: an attempt to keep Uber drivers driving for Uber, rather than splitting time with Lyft. It was a pretty good bonus offer then, and I bought into it. While other obligations usually kept me from getting 120 rides a week, 80 rides paid a $250 bonus, and 100 rides paid $375.

In effect, the 80 ride bonus increased the value of each ride by $3.13, The 100 ride bonus increased the value of each ride by $3.75. Those bonuses not only made driving profitable, reaching one tier by mid-Saturday night put the next level within reach if I was willing to drive on Sunday. Uber had me locked in and motivated, and the money was pretty good.

Then Uber really screwed the pooch. They changed the bonus to a 3-tier system. The numbers changed every week, but each week there was a huge distance from the second tier (usually 40 to 60 rides) to the third tier at 120 rides.

Knowing I wasn’t going to give 120 Uber rides in a week, once I reached the second tier there’s no incentive to drive exclusively for Uber. But I might increase my per-ride income by getting a little bonus money from Lyft. Guess what? Hello Big Pink.

Uber is failing to motivate me to drive past the second tier level each week. And they’ll have to pay out another sign-up bonus to fill the void they’ve created.

So, I’ve got to wonder, who’s setting those bonus levels, and why do they still have a job?

Barbara Broderick

Does anyone know if the rates stayed the same for LA? I live in OC but will drive in LA if they didn’t lower the rates. There is a lot more Lyft users in LA than in OC so I can see why they lowered it there but if they lowered in LA I don’t understand why. And understanding doesn’t mean I agree with it..

wcpreston

Wouldn’t driving from OC to LA and back take away any incremental profit you get from driving in the higher rates? 90 additional miles is $25-$45 of profit down the drain, unless you’re able to use your destination filter to get rides to/from.

Gregory Richardson

In NJ, where I drive, Lyft changed the gauranteed hours criteria so now you have to give two rides instead of one to qualify. Actually, they changed it BACK to two hours, because that’s what it was before. It makes a big difference. But who knows? Each driver could have different criteria. The fact that Lyft and Uber are now micro-targeting the incentives so that not every driver sees the same thing is going to make it much harder for drivers to organize.

VHound

Good job Christian, lots of valuable info indeed and thanks also for the comments from readers, but still, there is so much about the driver abuse that time and space can’t really address.

I am a full-time driver in LA, commute out of Sherman Oaks into the boost zones every morning. This week bonus is $90 for 60 trips M-4am till F-4am. I pass on this as 60 trips in 4 days is likely to be 8 hrs online and another 1 1/2 dead time driving. That’s about 38 hrs in four days. It also means that I would have to accept every request that comes in and likely spend the last 8 hrs around UCLA taking spoiled kids home from yoga class. I like to think that I have a life and that much time for $90 bucks is simply not worth it. I usually get a $90 for 35 rides Fri-4am to Mon-4am and I eat that up, but maybe not this week!

From my excel worksheet, I’m better off not chasing the $90 and concentrate on the bonus areas. But even that’s become more difficult when a ride take me out of the best zone(s) into the base rate areas and I have to eat my way back to where the money is.

Uber and Lyft are in serious financial trouble. They’re not going broke in the near future, but their investors are getting a bit nervous. Uber, losing #2.5 to $3 billion last year, is not what they expected. When you put in $100 million and the venture is valued at up to $70 Billion you’d think you could shit an IPO, flip your cheap shares and go buy another planet, but Travis and his gang that can’t shoot straight have squashed that dream.

Even Howard Hughes understood that there wasn’t going to be just ONE international airline, but Uber thinks differently and that’s what is going to kill them. All the money and resources they continue to pour into defeating Lyft will, in the end, defeat them. It is so sad (trump-ism) because if Uber wants more drivers all they have to do is raise what they pay drivers and everyone will drive for Uber as it is really a better app. But Travis Kalanick who obviously missed too many classes in Business 101, thinks his ride-sharing op is so good that he can destroy the face of his company – the drivers – and still find a psychotic underwriter who will build a prospectus on an IPO. Insanity everywhere and I personally am part of it.

About

I'm Harry, the owner and founder of The Rideshare Guy Blog and Podcast. I used to be a full-time engineer but now I'm a rideshare blogger! I write about my experience driving for Uber, Lyft, and other services and my goal is to help drivers earn more money by working smarter, not harder. Read More…

Join our e-mail list today and we'll send you a free PDF copy of The Ultimate Guide To Being A Rideshare Driver!

Blogroll

FTC Disclosure

Please note that The Rideshare Guy has financial relationships with some of the merchants mentioned here. The Rideshare Guy may be compensated if consumers choose to utilize the links located throughout the content on this site and generate sales for the said merchant.